1 week Ago By Tlatham21
Two of the United States’ more accessible luxury companies won’t be merging into one, it seems. Tapestry, which owns Coach and Kate Spade, and Capri Holdings, which oversees Versace and Michael Kors , have called off their planned merger, The New York Times reported on Thursday. The $8.
5 billion deal was announced last year, but the Federal Trade Commission sued to block the merger and a federal judge agreed with the federal agency last month. Tapestry and Capri “mutually agreed that terminating the merger agreement was in the best interests of both companies,” the two companies said, according to the Times . The move suggests that neither party believed an appeal would result in an eventual merger, the newspaper said.
After the two companies announced the acquisition plan, the FTC worried that a merger would run into antitrust issues, the Times noted. The commission believed that a combined entity could end up charging more for the so-called accessible luxury items sold by Coach, Kate Spade, Michael Kors, and the companies’ other brands. Tapestry and Capri countered by arguing that accessible luxury wasn’t a defined category.
The federal judge, however, said the accessories sold by these labels had distinct traits that differed from those considered true luxury. Following the news of the failed merger, shares in Tapestry rose about 10 percent, while shares in Capri dropped 4 percent. “We are now focusing on the future of Capri and our three iconic luxury houses,” John Idol, the CEO of Capri, said in a statement, adding that Capri’s brands have more than 1,200 stores throughout the world, with strong customer loyalty.
“We have always had multiple paths to growth, and our decision today clarifies the forward strategy,” Joanne Crevoiserat, the CEO of Tapestry, said in a statement of her own. “Tapestry remains in a position of strength.” Tapestry’s board also approved a program that will see the company buy $2 billion of its own shares, the Times added.
While this may be the end of the road for Tapestry and Capri, luxury brand mergers continue apace. Earlier this year, for example, LVMH took control of the elite clockmaker L’Epée 1839, and Giorgio Armani said he wouldn’t rule out a potential future merger for his brand either..
